Laggard to Leader

Laggard to Leader is at its heart a response to the oft-heard arguments that Australia is too small for our actions to make a significant difference to global warming, but it is much more than that. The report debunks Australia’s claims to be taking meaningful action at home and in UN climate talks. It comprehensively outlines a whole different way of thinking about the role of individual countries in climate change than that of the Australian government and political elite. It challenges the economic excuses for inaction. And it proposes an innovative set of bold actions Australia should take to make a real difference.

The report is professionally presented but accessible, as it is mostly written in plain language. It sometimes seems to confuse CO2 with CO2-equivalent, but its arguments are convincing.

The report begins by summarizing the urgency of the climate crisis and contrasting it with the lack of achievement in international negotiations. Humanity must rapidly phase out fossil fuels and other sources of greenhouse gas emissions, leaving the vast majority of the planet’s fossil carbon in the ground. The UN climate talks have gone on my entire life, but far from negotiators’ constant claims they are making progress, global fossil fuel CO2 emissions have risen by 50% since 1990 (and Australia’s emissions by 30%). The Kyoto Protocol has been sabotaged by offsets and creative accounting, and Canada has gotten away with completely flouting its obligations. Despite agreeing in 2010 to take urgent action to limit global warming to <2°C (a target which climatologists now realize is itself quite dangerous), countries’ national emissions targets do not remotely add up to that global objective, and the world remains on track for a catastrophic multiple degrees of warming. Most recently in Durban, they agreed to negotiate a global agreement that would not be implemented until 2020. But as the Australian government’s own Climate Commission says, this is the critical decade.

As the negotiations currently stand, the best-case outcome will be far too little far too late. BZE argue therefore we cannot rely on the UN process and its associated top-down model of climate action, which they describe as “Treaties, Targets, and Trading”. The aim of Treaties, Targets, and Trading is for all countries to agree a global binding treaty in which national emissions targets add up to achieve a safe global objective, and countries may trade pollution rights. (Laggard to Leader skips an important nuance here: this is Australia’s particular view of the ultimate aim of climate talks, as advised by Ross Garnaut.)

In accordance with UN accounting, Australia is generally considered responsible only for emissions occurring within its borders. The problem is we do not yet have a global framework in which national targets add up. Thus we need to look beyond our domestic emissions to a larger “sphere of influence”, which also encompasses emissions from the burning of fossil fuels we export and the manufacture of products we import. Global trade means countries have overlapping spheres of influence. This shared responsibility makes more sense from an ethical and practical point of view.

A sphere of influence analysis reveals Australia is far from a minor player. Australia’s domestic emissions in 2011 totaled 540 million tonnes of CO2e, the 15th largest of 195 countries and highest per capita in the OECD. But they are dwarfed by our exported emissions: 800 million tonnes CO2, third largest in the world after Saudi Arabia and Russia. We are the biggest coal exporter, controlling 27% of the global market, and the 4th biggest LNG exporter. Our domestic-plus-exported emissions are the 6th largest in the world. (The report does not attempt to calculate Australia’s imported emissions.) As co-author Fergus Green said when launching Laggard to Leader: “Saudi Arabia is the king of oil, Russia is the king of gas, and Australia is the king of coal.”

But it is the planned exponential growth in Australia’s fossil fuel exports that is truly staggering. BZE estimate our exported emissions could rise to 1.8 billion tonnes by 2030. According to my calculations they could be up to3 billion tonnes by2020, quadrupling in a decade to five times Australia’s domestic emissions, twice Saudi Arabia’s exported emissions, and a huge proportion of allowable global emissions. Australia has the power to decide whether this happens.

The report does a good job of explaining the ineffectiveness of Australian climate policies. The carbon price does not cover exported emissions and does not significantly raise the price of coal mining, so cannot affect the fossil fuel export boom. It aims to cut domestic emissions by a mere 5% by 2020 (and 80% by 2050). But it will not even do that, because it allows polluters to buy almost unlimited international offsets, as well as Australian land-based offsets. Treasury projects domestic emissions will actually rise until the mid-2030s then fall back to today’s level by 2050. Australia has always relied on cheap, dubious offsets and argued for them in global climate talks. Laggard to Leader rightly characterizes offsets as part of a “‘least-cost abatement’ mentality” that “privileges more risky and less effective forms of abatement and undermines efforts to deploy renewable technologies that are essential for Australia’s urgent decarbonisation task” (p. 24).

Insofar as it intends to make emissions cuts domestically, the Government relies on the dangerous diversion of gas as a transition fuel, while hoping its pipe dream of carbon capture and storage (CCS) will become feasible so Australia can make real emissions cuts after 2035. Little support is provided for renewable energy. As a fossil fuel, gas is part of the problem, not the solution. Leaked emissions of methane could make it worse than coal. Either way, new investment in gas would divert investment away from renewables and lock in fossil fuel infrastructure for decades, leading to dangerous global warming. CCS is unlikely to be feasible in the timescale in which decarbonization is required. In summary, the Government fails to recognize the need to phase out fossil fuels.

Indeed, BZE argue the federal and state governments are actively encouraging fossil fuel mining and export industries with “expansionist” policies. They point out the federal government “facilitates” projects that it considers of “strategic significance” by fast-tracking them through approval processes. Federal and state governments spend billions of dollars on fossil fuel subsidies, dwarfing the money spent on climate action. (Though not mentioned in the report, the Government spends billions “compensating” polluters for the carbon price, which in the case of coal power plants has actually increased their profitability.) Laggard to Leader concludes Australia is currently doing more harm than good.

Laggard to Leader systematically deconstructs the Australian Government’s ideology of climate action avoidance and proposes to replace it with one of climate activism. In particular, it proposes a new way of thinking about the role of countries in climate action, which they call Cooperative Decarbonisation (CD). The differences with Treaties, Targets, and Trading are summarized in this handy table:

Treaties, Targets & Trading

Cooperative Decarbonisation

Evolution of international cooperation

Top-down

Bottom-up

One solution or multiple

One comprehensive solution / “grand bargain”

Multiple solutions each of which is partial

Locus of power (ideal)

Centralised institutions

Polycentric (multiple centres of power)

Focus of policy model

GHG emissions per se

Economic and social processes that directly and indirectly cause GHG emissions

Decarbonising each economic sector through whatever means at their disposal, unilaterally and through cooperation with others

Outcome of each country’s efforts

Mutually exclusive efforts (each country assumes responses will add up to precise target)

Overlapping efforts (each country cannot assume responses will add up so must take individual or shared responsibility for all emissions within sphere of influence)

Underlying ethical principles

Fair shares based on equal per capita entitlements; modified by historical responsibility for emissions and capacity to pay (“common but differentiated responsibilities”)

Fair shares based on emissions within sphere of influence; modified by special responsibilities (based on scope of sphere of influence, capacity to pay, capabilities for climate solutions and leadership capacity)

CD is “a practical, problem-solving approach to the decarbonisation of every emissions-intensive economic and social process across the globe, within the timeframe necessary to preserve a safe climate, driven by national leadership, and accelerated through international cooperation” (p. 35). It focuses on bottom-up unilateral and bilateral actions and activism, as opposed to continuing to seek a perfect top-down solution through multilateral negotiations which are currently deadlocked. It argues willing countries should lead beyond their obligations, using every means at their disposal to eliminate all greenhouse gas emissions within their sphere of influence, and pressure and help others to follow in their footsteps.

I am of two minds about this alternate model of climate action: I think it has the greatest potential of all the ideas in Laggard to Leader, but it is also where I have the greatest reservations. BZE’s enthusiasm for bilateralism is in some ways reminiscent of the rhetoric and strategy of US climate negotiators, which led to the debacle in Copenhagen and the failing current regime of inadequate voluntary pledges. Earlier this year I argued the following:

The US approach – bilateral, voluntary, and bottom-up – will not work. Bilateralism is a dead end because the countries with highest emissions have lowest ambitions. Voluntary action leaves the door wide open for governments to break or fake their targets. And bottom-up pledges mean ambition will be determined by politics, not science. We need a top-down approach which decides on a global target of 2°C, 1.5°C, or preferably 350 ppm and divides it up among all nations.

I still essentially agree with what I said then. Treaties and targets (though not so much trading) is the right paradigm to pursue within UN talks. A global problem requires a global solution, and actions taken in the CD paradigm cannot be guaranteed to add up to a safe outcome.

That said, I also agree with BZE that “whether it is desirable or not, the bottom-up approach is the reality – for now and for the foreseeable future […] we have to make bottom-up work” (p. 34). We cannot sit and wait for the UN process to decide our future. In the absence of global agreement, willing countries should not limit themselves to pursuing a top-down treaty but instead do everything they can to change the world from the bottom up.

However, I don’t agree with BZE’s emphasis on bilateral cooperation over UN negotiations. We need to pursue both approaches: we need radical unilateral action in order to catalyze a multilateral agreement, yet we must not abandon hope of a binding global treaty as voluntary bottom-up action will not be enough. The report does acknowledge this to an extent: “achievements in each paradigm should ultimately make success within the other more likely” (p. 37). As well as leading unilaterally and bilaterally, Australia should also take a leadership role in multilateral talks, by taking on an ambitious binding target for 2017 and playing a constructive role instead of a destructive one.

What form should action outside the UN process take? Bilateral cooperation will not work if it follows the US-style strategy of blocking progress at UN climate talks while making well-publicized but meaningless voluntary agreements outside them. I am thinking of the Asia-Pacific Partnership on Clean Development and Climate (APP), which was little more than a publicity stunt by the biggest delayers (the US under Bush and Australia under Howard) to appear to be taking action outside Kyoto. Of course, BZE are clearly arguing for a bilateral process that, unlike the APP, aims to rapidly decarbonize its sphere of influence – bilateral activism instead of bilateral avoidance. Still, we should remain wary of bilateral negotiations between major players, which have never before resulted in ambitious action.

Ironically given its name, I’m more comfortable with the unilateral aspects of Cooperative Decarbonisation than its bilateral aspects. I agree that in an imperfect world we need to use a range of measures instead of putting all our eggs in the targets-and-trading basket. I agree we should do everything we can to decarbonize our sphere of influence, instead of merely implementing an inadequate target. I agree we must focus on structural economic change instead of cutting emissions at least cost. I agree we should penalize laggards with border tax adjustments and suchlike. These ideas are simply reason undistorted by the short-sighted obsessions of so-called “economic rationalism”.

CD’s sector-by-sector approach also has some advantages. Unlike Treaties, Targets, and Trading, it acknowledges not all tonnes of CO2e are equal: different types of emissions result from different economic processes and play different roles in the climate system. On the other hand, progress on secondary issues must not come at the expense of progress on the most urgent and important challenge: phasing out fossil fuels.

Laggard to Leader may be an imperfect vision for international negotiations, but it is an excellent blueprint for how Australia should act in the absence of a global treaty. It argues Australia has a responsibility to act because our sphere of influence is enormous, our historical emissions are the world’s 14th highest, and our per capita emissions are extremely high. We are also extremely wealthy and have vast renewable energy resources. Our leadership in the wrong direction gives us power to lead in the right direction: we are capable of changing global energy markets. Such leadership is in our national interest as it would tangibly reduce the likelihood of catastrophic global warming, as well as establishing Australia as a leader in zero-carbon technologies.

BZE argues Australian leadership can be compatible with international equity, if we act first and assist developing countries to follow us (a principle we have already agreed to in UN climate talks). In response to the argument that Australia must continue exporting fossil fuels to end poverty, they point out solar PV is cheaper in many off-grid regions, the external costs of fossil fuels are not accounted for, and climate change will hit the poorest people hardest. In any case, “without climate stabilisation at safe levels, all other progressive goals of international policy would become unattainable” (p. 47).

Laggard to Leader outlines a two-pronged approach Australia should take to address both our domestic emissions and our fossil fuel exports. A key way unilateral action by Australia can make a global difference beyond our sphere of influence is by changing the relative prices of energy technologies (ie. making renewables cheaper and fossil fuels more expensive). Renewable energy technologies are already becoming cheaper, but need further investment to bring down their costs faster. In particular, emerging technologies need government support to bridge the “valley of death” in which costs exceed available capital. It is investment in deployment that has driven down the prices of wind and solar PV. Though we should invest in all stages between R&D and maturity, above all we need deployment. The effect will be to lower the price of renewable energy technologies and increase their rollout everywhere.

The report outlines how Australia can rapidly decarbonize its domestic economy, drawing on BZE’s preexisting Zero Carbon Australia Stationary Energy Plan (they are working on plans for other sectors). It argues Australia can and should increase investment in commercial deployment to at least $15 billion per year, rising to $37 billion per year, to transition to 100% renewable energy over a decade. This high upfront cost would pay itself back over time. We should focus particularly on scaling up high-potential emerging technologies like concentrated solar thermal, which has the storage capacity to provide power around the clock. We could use our domestic actions as leverage to drive coordinated deployment of zero-carbon technologies around the world.

Internationally, Laggard to Leader advocates actions which Australia can take to break the deadlock and put fossil fuel phaseout on the global agenda. It argues the federal Government should impose a moratorium on new fossil fuel projects, as a first step toward phasing out fossil fuel mining and exports entirely. This moratorium should be announced in an international forum and immediately implemented. The report argues Australia should then launch urgent international negotiations and commission an expert report on a global fossil fuel phaseout, while demonstrating we are committed to leading and helping poor nations follow in our footsteps. A similar approach has been applied to other unethical products – for example, Australia prohibits the export of asbestos, though there is a global market for it.

Coal is currently in oversupply, and coal prices are expected to fall during the critical decade despite climate change policies (!). An Australian phaseout would at least help to prevent coal prices from falling. Other countries cannot immediately scale up supply to replace Australia: in some places it can take a decade to start a new coal mine and build associated railways and ports, and there is a grassroots movement against coal exports in the US. Australia’s fossil fuel reserves are about equal to the amount that can be safely burned, so leaving them in the ground would make a significant difference.

Furthermore, “the symbolic impact of the world’s top coal exporter and fastest growing LNG exporter exiting the fossil fuel business should not be underestimated” (p. 81). BZE argues international norms, even if they are not legally binding, can be very effective at pressuring countries to conform to ethical standards. At the moment, the norm is to dig up and burn fossil fuels. Australia phasing out its exports would help to create a new norm of leaving fossil fuels in the ground, where emissions are only acceptable in the context of a rapid transition to a zero-carbon economy.

The Australian Government equates fossil fuel interests with the national interest. Obviously this is wrong in the long term, but BZE argues it is also highly dubious in the short term. Only 0.3% of Australian jobs are in coal mining (and no jobs would be immediately lost from a moratorium). The majority of mining industry profits either go overseas or benefit only a small minority of Australians. The mining boom is driving up the Australian dollar and thus destroying other industries. And contrary to popular belief, the mining sector did not prevent a recession, but in fact went into recession itself in 2009.

Most importantly, the fact that most fossil fuels are unburnable implies the global economy contains a “carbon bubble”. The valuation of fossil fuel companies is based on the assumption that their reserves will be burned. If we wish to avoid unimaginable global catastrophe, that bubble must burst. When it does, those reserves will become stranded assets and the companies’ value will plummet. Environmentally unsustainable investments are ultimately also economically unsustainable.

Laggard to Leader is a very insightful report. Despite some reservations about Cooperative Decarbonisation, I think it gets most things right. Governments need to start thinking about greenhouse gases not like accountants trying to hide their excesses to get out of doing anything, but like activists trying to get something done. Australia cannot continue to use UN negotiations, flawed accounting, and weak domestic policies as an excuse for inaction. We must recognize the true enormity of our sphere of influence, and accordingly take bold ambitious actions inside and outside the UN process. As the report concludes (p. 91): “If you care, you lead.”

So far, the response to the report has been mostly deafening silence. The Australian Government is currently in the pocket of the fossil fuel industry and will not take action without massive public pressure. Therefore we need to publicize the arguments of Beyond Zero Emissions as widely as possible.

3 comments

Of note: “clean” coal advertising is appearing on a regular basis on American television. We have coal and nuclear plants where I live. How can anyone make coal “clean”? Sounds like an oxymoron to me.
Even now, I recently read that government officials in America are working to roll back EPA emission standards.
I appreciate your information. It helps me have a larger view of what’s going on.

[…] 2012/09/11: PlanetJ: Laggard to Leader A landmark report was launched a few weeks ago by Beyond Zero Emissions (BZE), Laggard to Leader: How Australia Can Lead the World to Zero Carbon Prosperity. Laggard to Leader is at its heart a response to the oft-heard arguments that Australia is too small for our actions to make a significant difference to global warming, but it is much more than that. The report debunks Australia’s claims to be taking meaningful action at home and in UN climate talks. It comprehensively outlines a whole different way of thinking about the role of individual countries in climate change than that of the Australian government and political elite. It challenges the economic excuses for inaction. And it proposes an innovative set of bold actions Australia should take to make a real difference. […]